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To GoDaddy CEO Aman Bhutani, there are glimmers of hope starting to emerge in a small business community shaken to its core by the coronavirus pandemic.
“What we’re seeing is even in verticals where you might think of as severely impacted, human creativity is taking over and they are adopting services very, very quickly. We have seen a quick jump across many of our verticals in terms of putting things online and those are all good signs of businesses pivoting and reacting to make sure even though the physical doors are closed they continue to stay open,” Bhutani said on Yahoo Finance’s The First Trade.
Added Bhutani, “What we saw especially in the U.S. is various non-required sectors and non-essentials take a hit in the second part of March. It didn’t matter if it was clothing, financial, home services, we saw fewer ventures created and online activity reduced. But over the last month as we go into April, we see stuff coming back.”
These insights from Bhutani make sense given the nature of GoDaddy’s business.
The last thing a business owner wants to do is stop paying GoDaddy to host a website when it’s the only way to drive any form of sales currently. In effect, GoDaddy’s services are often the last to get cut in tough times as they tend to be essential — provided the business hasn’t folded. Meanwhile, launching a website is often a first step for those people unemployed looking to earn money via a new venture.
To that end, GoDaddy recently told investors at an April 2 meeting that it has seen “minimal” impact to its first quarter business from the coronavirus pandemic. Sales are expected to be within $5 million of the prior first quarter sales guidance of $795 million.
Second quarter sales are expected to take a $25 million to $30 million hit. Even still, GoDaddy touted its 85% average customer retention rate at the investor meeting as an indicator of the business being rather recession resistant.
GoDaddy shares have gained 16% over the past month, outperforming the Nasdaq Composite’s 8% increase.
All of this isn’t to say small businesses are roaring back to full strength, that couldn’t be further from the reality. Whether it’s the local mom and pop pizza place to a franchisee that owns a few gyms, the fact is these businesses are closed amid state-mandated quarantines and social distancing efforts. That means no cash is probably coming into a business that still has bills to pay and likely, high levels of debt.
What’s more worrisome for small business owners is that it’s unclear when the U.S. economy will be allowed to reopen.
Worth mentioning is that the NFIB Uncertainty Index — which measures uncertainty on the part of small businesses — rose 12 points in March, the highest level since March 2017. Reports of better businesses conditions in the next six months declined 17 points in the month, the largest monthly decline going back to November 2012.